2015 Changes to Medicare

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) became law on April 16, 2015. In addition to extending funding for the Children’s Health Insurance Program (CHIP), this act modifies certain Medicare provisions. If you are currently covered by Medicare or will be in the near future, you may be interested in learning more about these changes, including the ones summarized below.

Health-care quality and cost control initiatives

The physician payment cut that has been debated for several years has been permanently repealed, and the law includes annual payment increases for physicians for some Medicare services. This may help ensure that patients will have continued access to their physicians.

New quality measures for physicians and certain hospital departments have been instituted; physicians who provide high-quality care will be rewarded.

Medicare Advantage special needs plans (SNPs) have been extended through the end of 2018. These plans may cover extra services in addition to the services covered by all Medicare Advantage plans, and may be available to people with chronic conditions, those who live in a nursing home or require nursing care at home, and those who are eligible for both Medicare and Medicaid.

Income-related premium adjustments for Medicare Parts B and D

Some beneficiaries with higher incomes pay higher premiums for Part B (medical insurance) and Part D (prescription drug coverage). For most beneficiaries, the government pays about 75% of the premium and the beneficiary pays 25%, but beneficiaries with higher incomes shoulder a higher percentage of the cost, based on modified adjusted gross income (MAGI) reported to the IRS. Beginning in January 2018, new income limits (thresholds) take effect which will subject some Medicare beneficiaries to higher income-related premium adjustments.

Current MAGI limits

Premium percentage

MAGI limits beginning in 2018

Premium percentage

Less than or equal to $85,000*

25%

Less than or equal to $85,000*

25%

Greater than $85,000 and less than or equal to $107,000*

35%

Greater than $85,000 and less than or equal to $107,000*

35%

Greater than $107,000 and less than or equal to $160,000*

50%

Greater than $107,000 and less than or equal to $133,500*

50%

Greater than $160,000 and less than or equal to $214,000*

65%

Greater than $133,500 and less than or equal to $160,000*

65%

Greater than $214,000*

80%

Greater than $160,000*

80%

*Limits for married couples are twice the limits listed here. Starting in 2020, all income thresholds will be updated (indexed) annually for inflation.

Subsidized Medicare premiums

The qualifying individual (QI) program that subsidizes Medicare Part B premiums for beneficiaries who earn 120% to 135% of federal poverty levels is now permanent.

Medigap

Medigap is private health insurance that supplements Medicare. Two of the standardized plans that may be sold in most states cover in full the costs that Medicare doesn’t cover such as Medicare Parts A and B deductibles and co-payments. This is called “first-dollar coverage.” Starting in January 2020, new Medicare enrollees will no longer be able to choose one of these plans because plans will be prohibited from covering the Part B deductible. However, beneficiaries who are already covered by a first-dollar Medigap plan will be able to keep that plan.

Identity theft

Currently, Social Security numbers appear on Medicare cards, posing a risk for any older individual whose Medicare card is lost or stolen. The legislation authorizes and funds the removal of Social Security numbers from all Medicare cards. For newly issued cards, this must be accomplished by April 16, 2019; existing cards must be reissued no later than four years after that.

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